Commercial Solar & Renewable Finance

Paying cash, or using traditional finance options, can totally eliminate the benefit you receive with your solar rebate. ASM Money finance solutions are designed specifically for renewable energy and can be up to 20% more effective than even cash.

Choose the right finance option for your business. Call your ASM Broker today …

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What are your Commercial Financing Options?


With long-term life equipment, like solar, an operating lease is the most common finance solution. There are two main reasons for this;

  1. It is an ‘income producing’ asset, and
  2. The  taxation department ruling stating solar must be depreciated over 20 years.

With a solar operating lease 100% of your clients payments, like the electricity bill, are tax deductible. While we must charge GST on rental payments, this is claimed back by your customer in their quarterly BAS statement making an operating lease the lowest finance cost option in cash terms. With an operating lease, the asset is owned by the finance company and does not appear on your client’s balance sheet giving them more financial leverage to continue to purchase other assets to operate their business. Even with the new IFRS 16 accounting guidelines solar is one of the few assets where an operating lease will remain unaffected offering enormous financial benefits to your client. #

For a detailed discussion on finance types please read the article “Moving Away From the Gold Plated Grid” published in the 14 June 2018 Ecogeneration journal.


The other main option, which may be appropriate for your client, is a Chattel Mortgage. In this option, your client purchases the goods and brings the solar asset onto their asset register providing the finance company a mortgage over the goods. As the amount financed is the whole amount including GST the consequent payments tend to be slightly higher. The main advantage to this style of finance is the big ‘GST hit’ in the quarter your client purchases the asset. Your client claims 100% of the GST paid on the purchase price in their next BAS statement receiving a GST refund which typically will cover three or four monthly instalments – or sometimes used to pay down the loan. The main downside to this facility is payments are NOT tax deductible and only depreciation and interest can be claimed as a tax deduction.

A Chattel Mortgage is often selected when a purchase is under $20,000 to take advantage of the tax rules regarding small asset purchases. With this tax feature the whole asset may be written off in one year (subject to ATO guidelines). Even taking this into account, however, it is much more effective to use an operating lease, in cash terms, due to the unique nature of solar.

Solar Finance Option Comparison $40,000 inc GST ex-STCs ($36,364 ex GST ex-STCs)

 PeriodDepositFeesMonthlyTax Benefit5 year cash outflow After Tax
Operating Lease60mths0%$220$740$13,983$30,417
Chattel Mortgage60mths0%$350$861$8,570$43,090
Bank Loan60mths0%$350$796$8,190$39,570

This table is a comparison of the main forms of  finance used in solar projects and does NOT take into account the significant savings in electricity – which is the same for all four scenarios. In this example, we use a $40,000 (including GST) example. As you can see the after-tax cash position, over 60 months, is better using the operating lease option assuming the company is a tax paying company. Other options may be more effective for non-profits, incorporated bodies and Government agencies. Just call our finance experts who will be able to craft a solution specifically for your clients’ needs.

For a detailed discussion on finance types please read the article “Moving Away From the Gold Plated Grid” published in the 14 June 2018 Ecogeneration journal.


The first question we are typically asked is “What is your interest rate?”

While the interest rate is an important part of a finance package,  selecting the right commercial finance product to support the financial needs of the business, is just as important.

Here is an example of how an ASM Money finance consultant crafted a solar finance solution specifically to meet the needs of a customer.

This Riverland fruit growing business had been trading well and was producing significant profits resulting in a potentially very large tax liability for the current year. All indications were the following year was going to be even better. They were tempted to just pay cash to install solar.

The ASM Money consultant pointed out, with the slow rate of depreciation allowed by the tax office, a short-term rental (2 years) was probably a better idea and would generate significant tax benefits. They recommended he take out an operating lease for the system over two years and pay annually in advance. The grower was already planning to pay cash so this was just a simple  change to the way they were going to pay the cash.

This simple change took the $85,000 solar array, after taking all tax benefits into account to a cash outlay of $57,811 over ten years while paying cash up front would cost $65,681 over the same period. Even better, the cash payments were now 100% tax deductible saving the grower an enormous tax bill.

As rural production can be very uncertain, this also preserved cash for the following years when uncertain weather patterns might put pressure on the business.

Just as important was timing. The finance had to settle by 30 June and it was already the end of May. Using our ‘low doc $150,000’ facility approval was completed the same day, documents completed and installation commenced so settlement could occur on 28 June. Two more days delay and they could say goodbye to this years tax write off and would have ended up paying company tax on a very large sum of cash!

#ASM Money are not financial advisors and recommend you seek independent accounting guidance in regard to IFRS 16

ASM Money provides the very best finance solutions and options for your clients.

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